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THE DEMAND FOR DOMESTICALLY PRODUCED SAWN TIMBER: AN APPLICATION OF THE DIEWERT COST FUNCTION
Author(s) -
Doran Howard E.,
Williams David F.
Publication year - 1982
Publication title -
australian journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 0004-9395
DOI - 10.1111/j.1467-8489.1982.tb00620.x
Subject(s) - offset (computer science) , relative price , function (biology) , economics , taste , econometrics , microeconomics , agricultural economics , computer science , chemistry , food science , evolutionary biology , biology , programming language
The Australian demand for domestically‐produced sawn timber is investigated by considering its major use — as an input into residential construction. Using a cost function approach, a system of equations is derived expressing quantities demanded in terms of relative prices. Cross‐price elasticities are estimated and the falling input‐output ratio of timber in residential construction is analysed by decomposing the change in this ratio into price, outputs and taste/technology effects. A major finding is that, while substitution of timber for other inputs has been encouraged through relative price movements, this effect has been more than offset by taste and technology trends away from timber usage.